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State targets drug costs

Tired of waiting on Congress, Florida and other states are trying to help seniors cope with rising prescription prices.

Margaret Hiller figured she would do a little comparison shopping last October while visiting Buenos Aires. The target of her quest? A prescription drug called Amiodarone that controls her heart's arrhythmia.

When she buys the drug stateside, Hiller usually pays $2.18 for each tablet. But she found the same drug from the same manufacturer for 27 cents per tablet in Argentina. She loaded up with a 10-month supply and saved almost $600 _ more than the cost of her plane ticket.

Hiller, a 69-year-old Spring Hill retiree, is not lacking for creature comforts. But she worries about senior citizens who can't afford the drugs that keep them healthy. As a nurse in western New York a few years ago, she had patients who cut their pills in half because Medicare wouldn't pay for drugs.

"I feel so sorry for senior citizens who are dependent on Social Security, like my mother, or people on extremely limited income," she said. "In a country like ours, it's disgraceful that we can't find the money."

Experiences like these, repeated thousands of times around the country, are fueling a growing political consensus that something must be done about seniors and drugs. Even "Flo," the silver-haired dynamo of pharmaceutical industry television commercials, has stopped warning about government intrusion into our medicine cabinets. Instead, she sweetly touts universal coverage.

Now Florida legislators have taken up the drumbeat.

A bill filed in the House this month would:

Spend up to $40-million to help low-income seniors pay for their drugs.

Lump the Medicaid program, prisons, state employee insurance fund and other agencies into a wholesale buying consortium, which would negotiate deep discounts from manufacturers. A study commission would then look for ways to let seniors buy into this consortium.

Require that pharmacies selling at a discount to Florida's 1.5-million Medicaid recipients offer that same discount to everyone on Medicare. State officials estimate savings of up to 15 percent.

The elderly "are a huge segment of our population. We can't turn our backs on them," says co-sponsor Rep. Johnnie B. Byrd, a Plant City Republican who is majority whip and in line to be speaker of the House in two years. "Choosing between prescriptions and eating is just not the way it ought to be in 20th century Florida."

Until recently, drug coverage for seniors has largely been viewed as a federal issue. When Medicare was designed in the 1960s to provide health care for the elderly and disabled, it focused on hospitalization and doctor visits. Many of the wonder drugs that now extend people's lives were not yet invented. So Medicare left people to pay for their own drugs.

Now, with drug costs rising rapidly, seniors are spending an average of 20 percent of their income on health care, according to an AARP survey. That's more than they paid before Medicare got started.

With Congress resisting attempts to revamp Medicare, some state governments are seeking remedies of their own.

Seventeen states now provide some kind of drug subsidy to low-income seniors, often using lottery or tobacco settlement money.

Maine, Vermont, New Hampshire and Massachusetts are discussing a bulk-buying coalition. There was even talk of state-run bus expeditions across the Canadian border so New Englanders could fill up on cheaper prescriptions. But FDA rules against importing foreign drugs squelched that idea.

California came up with the Medicaid-Medicare connection that Florida and several other states are now exploring.

Medicaid, a federal-state health insurance program for the poorest of the poor, has always paid for drugs. Like HMOs and other big insurance plans, states typically demand discounts before they will reimburse pharmacies for Medicaid patients.

This week, California begins a new program. Pharmacies that sell to Medi-Cal (California's version of Medicaid) must offer the same discount to anyone with a Medicare card.

"The beauty of the law is that we didn't create a bureaucracy, and it comes at virtually no cost to the state," said Sen. Jackie Speier, the law's creator.

Elderly volunteers who lobbied for the law compared their retail drug prices with the Medi-Cal price and came up with savings ranging from 10 percent to 40 percent, Speier said.

During debate on the law, she said, the pharmacy industry stayed on the sidelines. Already losing business to the Internet or from people going to Mexico, the industry figured that the discount might bring in business from seniors who will buy toothpaste or toilet paper along the way.

The California model is spreading to other states. Besides Florida, Wisconsin and Minnesota have introduced similar legislation. Lawmakers from at least six other states have made inquiries, Speier said.

Rep. Nancy Argenziano, a Dunnellon Republican who is chairwoman of Florida's House Elder Affairs Committee, is co-sponsoring the drug bill with Byrd. She said House leadership has given her positive signals that some kind of drug reform will pass this year.

The economy is strong. The state is running a surplus. And Medicare HMOs, which once provided a haven for seniors with heavy drug needs, are either pulling out of Florida or cutting way back on drug coverage.

"It's pretty hard to eat your lunch every day knowing there are people out there who can't afford their medications," Argenziano said.

Florida Medicaid pays pharmacies a little bit more than what drug manufacturers charge wholesalers. For many drugs, this Medicaid reimbursement rate is very close to what pharmacies have to pay the wholesaler.

At the request of Argenziano's committee, the state Medicaid office tried to estimate the savings that Florida's 2.8-million Medicare beneficiaries could expect under the Medicaid-Medicare tie-in. Though many have some drug coverage through retirement plans, private insurance or Medicare HMOs, those benefits are usually limited.

Staff members called four drugstore chains in 15 cities and collected prices for 20 prescriptions commonly used by elderly. The combined retail cost for these drugs was $838.03, more than $109 over the Medicaid rate.

Although those figures represent a collective savings of 15 percent, Jerry Wells, Medicaid's pharmacy program director, cautioned that the price differences varied widely depending on the drug and where someone buys it.

For example, stores often sell the heart medicine Lanoxin below cost to attract customers. The average retail price in the survey was actually $1.47 less than the $9.09 that Medicaid ordinarily would pay according to its formula. (If the retail rate is lower than the Medicaid rate, Medicaid pays the retail rate.)

Prilosec, a common ulcer drug, retailed at $115, only $3.89 more than the Medicaid rate.

At the other end of spectrum, generic Zantac, another ulcer drug, went for $46 retail _ $25 higher than the Medicaid rate.

Foreseeing opposition from the pharmacy lobby, the Elder Affairs committee already is marshalling numbers for fallback positions. Wells also was asked to estimate savings if the bill required the pharmacists to sell at the Medicaid rate plus 2{ percent or the Medicaid rate plus 5 percent.

Pharmacists, who are just learning details of the bill, are concerned.

"Our profit margins are very small. This would just decrease them more. We only make 3 cents on every sale dollar," said Michael Polzin, spokesman for Walgreen Company. "The retailer shouldn't be absorbing all the costs of reducing health care costs."

Studies show that pharmaceutical manufacturers, not the retailer, are the cause of high drug prices, Eckerd Corp. said in a prepared statement. Eckerd runs a pharmacy profit margin of about 2 percent on sales, compared to 29.7 percent for the pharmaceutical industry, the statement said.

"The federal government should solve this problem because it can examine all aspects of what is contributing to rapidly escalating prescription drug costs and create a fair system that doesn't harm local community pharmacy businesses."

Wells said he heard another concern while talking to pharmacists: They often sell common drugs at cost or below-cost because they make a killing on some of the less common drugs. If they have to charge the Medicaid rate for all drugs, such pricing may have to go.

_ Researcher Kitty Bennett contributed to this report, which also includes information from the New York Times. Stephen Nohlgren writes about aging and retirement issues. He can be reached at 727-893-8442 or

Drug reform proposals

Three bills have been introduced in the Florida Legislature to help seniors with the cost of prescription drugs. Here are the highlights. (Full text can be found on the Internet at

HB769 (Reps. Argenziano and Byrd)

+ Creates "Pharmacy Benefit Program" for seniors who meet these yearly income requirements: Individual _ $9,888 or less; couple _ $13,272 or less. Participants would make a 20 percent co-payment and benefits would be capped at $1,000 a year. Appropriates $40-million to fund this program.

+ Sets up study commission to examine expanding the program to more seniors.

+ Requires any pharmacy that sells drugs to Medicaid beneficiaries to offer the same discount to anyone with a Medicare card.

+ Sets up bulk-purchasing consortium for people getting drugs through Medicaid, the new Pharmacy Benefit Program, state employee group insurance, the Department of Corrections, Department of Health and the Department of Children and Families.

+ Would seek waiver from the federal government that would allow Medicaid money to finance other drug programs for the elderly.

HB611 (Rep. Rojas)

+ Subsidizes drug purchases for low-income elderly according to a sliding scale of co-payments and deductibles. Highest yearly income to qualify is $15,000 for an individual and $25,000 for a couple. No specific appropriation authorized.

+ Sets up "Elderly Pharmaceutical Insurance Coverage Board" to oversee eligibility requirements and claims processing.

+ Pays pharmacies at a discount.

SB940 (Sen. Lee)

+ Subsidizes drug purchases for Medicare recipients up to an amount yet to be appropriated.

+ Instructs Elder Affairs Department and Agency for Health Care Administration to administer the program and determine income eligibility, co-payments and deductibles.